Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 24401

IMPLEMENTATION COMPLETION REPORT(IDA-28740; PPFI-P7560; PPFI-P7561)

ON A

CREDIT

IN THE AMOUNT OF SDR 8.3 MILLION

TO THE REPUBLIC OF

GUINEA

FOR A

MINING SECTOR INVESTMENT PROMOTION PROJECT

06/25/2002

This document has a restricted distribution and may be used by recipients only in the performnance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective December 2001)

Currency Unit = FGN1,000 GNF = US$ 0.50

US$ I = GNF 2,000

FISCAL YEARJanuary 1 - December 31

ABBREVIATIONS AND ACRONYMS

ACG Alumina Company of GuineaANAIM Agence Nationale d'Amenagement des Infrastructures MinieresAredor Aredor S.A. (a diamond mining company)BGGA Bureau Guineen de la Geologie Appliqu6eCBG Compagnie des Bauxites de BokeFGN Franc GuineenFriguia Guinean alumina production company (operation near city of Fria)GNF Guinean FrancLNG Laboratoire National GuineenMMGE Ministere des Mines, de la Geologie et de l'EnvironnementMSIPP Mining Sector Investment Promotion ProjectOFAB Office d'Amenagement des Bauxites de BokePACV French acronym for Village Communities Support ProjectPRCI French acronym for Capacity Building for Service Delivery ProjectPSR Project Status ReportSAR Staff Appraisal ReportSBK Societe des Bauxites de KindiaSDR Special Drawing RightsSTG Services Techniques Generaux

Vice President: Callisto E. MadavoCountry Director: Mamadou Dia

Sector Manager: Peter A. van der VeenTask Team Leader: Heinz Hendriks

GUINEAMINING SECTOR INVESTMENT PROMOTION PROJECT

CONTENTS

Page No.I. Project Data I2. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 14. Achievement of Objective and Outputs 35. Major Factors Affecting Implementation and Outcome 66. Sustainability 87. Bank and Borrower Performance 88. Lessons Learned 99. Partner Comments 1010. Additional Information 10Annex 1. Key Performance Indicators/Log Frame Matrix 11Annex 2. Project Costs and Financing 13Annex 3. Economic Costs and Benefits 15Annex 4. Bank Inputs 16Annex 5. Ratings for Achievement of Objectives/Outputs of Components 17Annex 6. Ratings of Bank and Borrower Performance 18Annex 7. List of Supporting Documents 19Annex 8. Borrower's Contribution 20

Project ID: P001077 Project Name: MIN SECT INV PROMOT

Team Leader. Heinz Hendriks TL Unit: CMNPO

ICR Type: Core ICR Report Date: June 25, 2002

1. Project Data

Name: MIN SECT INV PROMOT L/C/TFNumber: IDA-28740;PPFI-P7560;PPFI-P7561

Country/Department: GUINEA Region: Africa Regional Office

Sector/subsector: NN - Mining & Other Extractive

KEY DATESOriginal Revised/Actual

PCD: 05/08/95 Effective: 06/30/96 10/10/96Appraisal: 06/15/95 MTR: 05/31/98 06/15/98Approval: 06/04/96 Closing: 12/31/2000 06/30/2001

Borrowzer/Implementing Agency. GOVERNMENT/Ministry of Mines, Geology and EnvironmentOther Partners: French Cooperation

STAFF Current At Appraisal

Vice President: Callisto E. Madavo Jean-Louis SarbibCountry Afanager: Mamadou Dia Silvia SagariSector Manager: Peter van der Veen Ian ChristieTeam Leader at ICR: Heinz HendriksICR Primary Author: Heinz Hendriks

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=HighlyUnlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:The project objectives were to increase the mining sector's contribution to national income and publicrevenues by: (i) strengthening the Government's capacity to act as a facilitator and regulator of miningactivities and laying the groundwork for efficiently implementing new sectoral policies and procedures; and(ii) helping attract private investments for the development of the sector.

The objectives were clear and important for the mining sector. Due to the sector's dominant role in thecountry's economy and its potential to be one of the most important pillars for economic growth, theobjectives were also important for the country and for the Bank's Country Assistance Strategy, whichsingled out agriculture and mining as growth sectors. There were geological, political and financial risksthat could have endangered the long-run prospects of the sector and the successful implementation of theproject. Potential private investors could have abstained from investing in Guinea for geological andpolitical reasons, while the Government could have failed on following through on implementing reformmeasures, as well as on assuring the availability of counterpart funds for project implementation.

3.2 Revised Objective:The development objective has not been revised.

3.3 Original Components:The project consisted of five components:

* Legal Component. Under this component, short-term consultant services were to be provided forimprovement of the legal and regulatory framework of the mining sector that would put Guinea at parwith its competitors for intemational mining investment. The task was to include the elaboration of amodel investment contract consistent with the mining code.

* Data Component. Under this component, service contracts procured competitively and supervisedunder a twinning arrangement between MMGE and a foreign geological survey firm, were to delivergeophysical and geological data and maps, complemented with the mining cadastre and mininginformation, all installed ready for use on new computers. The component was important because ofexisting evidence that mining investors prefer countries with well developed geological data systems.

* Institutional Component. Under this component, short-term consultant services were to be provided forassisting MMGE to increase the efficiency of its core services and reduce or divest non-essential orcommercializable services. The task included improvement of organization and management of thegranting of mining rights, the promotion of new investment and field surveillance of mining activitiesand their environmental impact.

* Restructuring Component. Under this component, short-term consultant services were to be providedfor assisting the Government in preparing plans for redefining its role in mining enterprises in whichthe Government was holding a major interest. The task was to include the elaboration of plans fordivestiture of social services.

* Training. This component was to support and supplement the four main components with courses,workshops, and seminars on relevant topics, with emphasis on local training and events. Thecomponent also included participation in international mining conferences for training and promotionpurposes.

The components were closely related to achieving the objectives. They were based on relevant lessonslearned in prior projects in the country and in the mining sector, in Guinea as well as worldwide. Becauseof weaknesses in the country's institutional capacities, the components were designed mainly for executionby experienced international consultants and service companies. This was in particular true for the DataComponent, which included highly specialized technical activities.

3.4 Revised Components:

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The components have not been revised.

3.5 Quality at Entry:The ICR rating for quality at entry is Satisfactory. The project objectives were consistent with the CAS andgovernment priorities. The project design considered adequately the weaknesses in local implementingcapacity and the geological, political and financial risks of the project. The contracting of services for theData Component and their supervision under a twinning arrangement proved to be the right decision.Focusing the geological work on mapping of the northeastem part of the country did attract the interest ofcompanies for gold and diamond exploration. The reform measures taken by the Government in the bauxiteand alumina subsector improved the management of existing operations and did place Guinea on theintemational scene as a serious contender for a new large alumina investment. The design arrangementsmade for provision of counterpart funds effectively reduced the risk of a financial impasse for projectimplementation. The development impact indicators, consisting of the number of new gold and diamondmines in operation as well as of the number of active exploration permits, were selected prudently andproved to be attainable without change.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:The project clearly achieved its objectives of: (i) strengthening the Government's capacity to act asfacilitator and regulator of mining activities and laying the groundwork for efficiently implementing newsectoral policies and procedures; and (ii) helping attract private investment for the development of thesector. The Government's capacity was strengthened through harmonization of laws, institutionalstrengthening of essential services and abolishment of non-essential services. Groundwork for efficientimplementation of new sectoral policies and procedures was laid by the adoption of a modern mining codeand the abolishment of OFAB at the outset of the project. These measures were followed by the transfer ofmanagement to private operators and the abolishment of ANAIM. New private investment was attractedfor two gold and two diamond mines, for urgent rehabilitation work at the Friguia alumina plant, as well asfor a significant increase of exploration activity. These achievements exceeded the performance indicatorsestimated at appraisal, which only foresaw one diamond mine in operation and no investment for theFriguia alumina plant. In addition, the project clearly helped to identify future major projects for aluminaproduction and iron ore mining, as well as to define a strategy for making them happen in the medium andlonger run.

At completion of the project, Guinea had increased the export revenues from mining to over $500 millionper year, an increase of more than 20% from the low level of about $400 million per year in the mid-l 990swhen the project was appraised. This was achieved despite a significant drop in world market prices forbauxite, gold and diamonds. Essentially, the increase is due to the output of new industrial gold mining, adevelopment to which the project contributed. However, despite the increased exports, Guinea could notmaintain its level of tax revenues from mining. Taxes paid by industrial mining operations dropped from$109 million in 1995 to $79 million in 2000. The drop is caused by a deterioration of CBG's profitability,which in turn is caused chiefly by a decline of the bauxite price and, to a lesser degree, by more difficultmining conditions that have been largely offset by the company's cost reduction efforts. In addition, the taxrate for CBG returned from the very unusual and unsustainable level of 85%, which was in effect in themid-1990s on the basis of a temporary agreement, back to the 65% of the original concession agreement.To maintain its role in international bauxite mining and attract investment for future downstream aluminaproduction, Guinea must fully respect the agreements with its international aluminum industry partners andadapt to existing international standards. It was therefore unavoidable for Guinea to effect the tax changefor CBG.

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While economic growth and related indirect contribution to poverty reduction remain the most importantpotential impact of mining, the sector can also directly contribute to poverty alleviation, by improving itsimpact on sustainable development of mining communities. The recognition of the need to furthercontribute in this way and to decentralize mining administration services is an additional achievement of theproject. By now, steps have been taken to integrate mining into the Bank's two new pillar operations, thePACV and PRCI, for implementing the new Country Assistance Strategy.

4.2 Outputs by components:Legal Component. The output of this component is rated Satisfactory, although the originally intendedactivities under the component were only partly completed. The non-completion is mainly due to a difficultrelationship between the client and the consultant that finally led to a mutually agreed early termination ofthe contract and relates principally to the design of a model investment contract for mining investment, anactivity that was considered important initially. However, feedback received from mining companiesindicates that a standard contract is not always preferred over a negotiated contract and that the new miningcode which was adopted by the Government already during appraisal of the project, is no longer a handicapfor mining investments and contains sufficiently clear rules for the concessioning of mining rights. Whilethe non-existence of a model contract remains a shortcoming, it is not a critical one. The main focus of thelegal component has been on the harmonization of the mining code with other codes, in particular thoserelated to water, forestry, urban planning, labor and the handling of explosives. Five interministerialregulations have been signed to this effect. Other positive contributions of the component have been anenvironmental audit of all mining operations and a bauxite study. They helped to set new directions, fordecentralized services of the environmental authority and for renewed strategy focus on bauxite, the mineralin which Guinea has a clear comparative advantage. The outputs of the component have been measured interms of average time lag between an application for an exploration permit and its issuance as well as interms of the number of active exploration and mining permits. The targets for both indicators have beenachieved. The average time lag between application and issuance of a permit was reduced from about 2months in 1996 to about I month in 2000, while in the same period the number of active permits wasincreased from less than 30 to 45.

Data Component. The execution, output and outcome of this component have been Highly Satisfactory.An airbom geophysical survey and a new geological map of the gold-bearing part of Northeastern Guineawere completed on time and below estimated costs. In parallel, the Government of France financed thecompletion of the geological map of Southeastern Guinea. Data from the geophysical surveys and thegeological mapping have been entered into a computerized geological and mining information system. Awebsite has been created, providing access to data and additional information. The maps have been printedand published, and were available at a Conakry mining symposium in early 2000. The componentcontributed greatly to a steep increase in exploration activity by international investors, in particular forgold mining, but also for iron ore and diamonds. The increased exploration activity led to the developmentof a new gold mine and also of a new diamond mine. Hitherto unknown 'world-class', high-grade iron oredeposits in the Simandou mountain range have been discovered, increasing Guinea's prospects to becomealso a first-rate candidate for future iron ore mining, in addition to its traditional role in world bauxitemining.

Institutional Component. The output of this component is rated Satisfactory, because of the shiftedemphasis towards essential services and decentralization, the arrest of unsustainable and redundant servicesand the improvement of governance and transparency. MMGE's capacity for investment promotion andinformation delivery has been significantly strengthened. In addition, two important conferences were held:a mining symposium in Conakry at the beginning of 2000; and one year later, a roundtable in Paris on the

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opportunity of constructing a greenfield alumina plant based on the important bauxite reserves of the Bokearea. The mining cadastre has now been established as an independent unit reporting directly to theMinister. Guidelines for more efficient field inspections and services have been prepared. It has beenrecognized by the Ministry that, as the next priority task, its decentralized services in the mining areas needto be strengthened with the overriding goal to facilitate and promote sustainable development in miningareas. This new policy direction has been developed during the later stages of the project, as part of adialogue with the Government on the project's results and next steps. MMGE stopped supportingunsustainable technical services that are not compatible with the Ministry's role as a regulator and forwhich the state cannot afford to provide a budget. A ministerial order dissolving STG, BGGA and LNGwas issued and put into effect. While the order could not solve the problem of personnel adjustment (asystemic problem of public services in Guinea that transcends the capacity of any ministry), at least itascertains that no unsustainable programs are maintained and that the personnel is freed for more usefulwork within the Ministry.

Restructuring Component. The output of this component is rated Satisfactory, because all miningoperations are now managed by private partners and government interference with operation of the mineshas been greatly reduced. When the project was prepared and appraised, the Aredor diamond miningoperation was fully government-owned, due to withdrawal of the previous private partner (who had a 51%share). At the early implementation stage of the project, the Government attracted a new partner (with a85% share under the new mining code). CBG, the country's 'flagship' mining enterprise that dominates thenational economy with regard to foreign exchange earnings and government revenues, is now fully managedby Alcoa, the company's largest private shareholder. The previous post of a national deputy manager, apolitical appointee, has been abolished. This action has been much appreciated by the private investors.Friguia, Africa's sole alumina plant, became 100% government-owned when its previous private partnerswithdrew due to notorious non-profitability and a dispute with the Government over management issues.Thereafter, the Government succeeded in transferring the operation of the plant and the marketing of theproduct to the private group ACG under a long-term (25 years renewable) leasing agreement. ACG carriedout overdue repairs and overhauls, stabilized the production and is serving old Government debt related tothe plant. SBK, a cold war era bauxite venture between the former Sekou Toure Government and theSoviet Union, followed the successful long-term leasing example of Friguia. SBK is now fully run by theprivate Russian Aluminum company, which is committed to overdue repairs and modernizations. While therestructuring of the four companies (Aredor, CBG, Friguia and SBK) falls short of the transfer of assets, itis a major step forward that has increased potential investors' interest in the country's mining sector. Whilethe original scope of the project included only technical assistance for the preparation of enterpriserestructuring or privatization, the management of all enterprises was actually privatized and, in addition, atransfer of assets to the private partner was achieved at Aredor. Even the transfer of assets in CBG andFriguia was actually tried with involvement of a competent investment bank. However, at this stage noinvestors were seriously interested. The original plans for social service divestiture have been partlyimplemented at SBK, but became of less importance once the mining operations were transferred to fullprivate management. The Government has demonstrated significant readiness to support the privateoperators if they deem the separation of social services necessary.

Training. The output of this component is rated Satisfactory, because it increased competence andmotivation, and because it helped to put the focus on essential services. Much of the training was providedlocally with local trainers in seminars to enhance institutional capacity as well as in general courses oncomputer literacy and English language for several hundred persons. Training abroad was provided to 90persons, mainly for subjects of geo-technical and mining administration interest, as well as to allowGuinean experts to participate in intemational mining conferences. Every year, the training program was

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retained by MMGE on the basis of needs and merits. All candidates for training abroad were approved bythe Minister. The total training costs were shared between IDA (69%), the French Cooperation (27%) andthe Government of Guinea (4%). Despite the cost sharing, there was a surpassing of IDA's original costestimate. The expenses incurred are considered justified, given the serious weaknesses in institutionalcapacity at the beginning of the project, the very international nature of mining and the related need to bepresent in key intemational events for mining promotion, as well as the need to award and motivate staff.

4.3 Net Present Value/Economic rate of return:As a capacity building and technical assistance operation, this project was not subject to an economicevaluation in terms of net present value and economic rate of return calculations. Nevertheless, a tentativeeconomic rate of return of 55% was calculated at appraisal. Going through the same calculation withupdated assumptions (Annex 3), a slightly higher rate is obtained, despite lower mineral prices but higherthan originally estimated export quantities that more than offset the price decline. As expressed atappraisal, the project did help open the doors to new private investment in bauxite, alumina, gold anddiamond mining. As a result, Guinea did further consolidate its leading role as a bauxite/alumina exporter,and did become a significant regional producer of gold. Despite decline of intemational mineral prices, theexport value did increase by more than 20% over the US$400 million level prevalent at appraisal.However, despite this increase, the tax revenues paid to the national budget still declined, because CBG'sproduction costs increased due to geology, and depreciation of new investment largely compensated profitsfrom gold mining.

4.4 Financial rate of return:A financial rate of return calculation was not applicable to this project because the credit was not grantedto a revenue eaming entity. Without the project and the increase in bauxite and gold output, theGovemment's tax revenues would have been still lower. I addition, the national budget would have beenburdened with debt service for old existing government debt related to the Friguia plant that is now servicedby ACG as well as with hidden subsidies for SBK. It is estimated that the positive impact on the nationalbudget averages about US$5 million per year over the medium run, an amount that justifies financially theproject expenses. However, the country's overall revenue receipts from mining, which were about US$100million per year are presently about 10-20% lower due to lower prices for the output on intemationalmineral markets, gradually increasing mining costs at CBG due to geological conditions and temporarydepreciation charges for recent investments.

4.5 Institutional development impact:The institutional development impact of the project has been significant. The Government clearly retired asan operator from the country's mining operations, while the original project concept foresaw neither thetransfer of management nor privatization of mining enterprises, but only the provision of technicalassistance for preparation of restructuring. Though today the Govemment is still to a large extent owner ofthe mining assets, this is due primarily to history and a related reluctance of private partners to buy theGovernment shares. All companies are now govemed by commercial company laws (applicable to a S.A.,or Societe Anonyme). Under the long-term leasing contracts the new private operators have assumed thefull economic risk of operation, without any guaranteed compensation for management. At the Govemmentlevel, the regulating and facilitating capacity of MMGE has been strengthened. Budgetary transparency andefficiency was greatly improved by the abolishment of ANAIM. A commitment was obtained to thestrengthening of decentralized prefectural services for mining and environment with the objective offacilitating and actively contributing to the sustainable development of communities in mining areas.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:

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Because of the strong dependence of mining operations on international mineral markets, the project hasbeen subject to factors outside the control of government and implementing agency. As explained in Section4.4, the outcome in terms of annual government revenues from mining would have been higher had mineralprices not declined. Also, the disinterest of international foreign investors, in particular of major aluminumcompanies, for historical and world market reasons, is to a large extent outside the control of govemmentand implementing agency. These factors are common in the mining industry and present inherent risks ofmining projects. They can hardly be reduced through project design. Avoidance of involvement in the sectorwould eliminate the risk but also loose the opportunity for important improvements.

5.2 Factors generally subject to government control:There are three areas in which different government practices and policies could potentially have increasedthe project's positive impact:

* Inter-ministerial cooperation. The harmonization of legislative texts from different codes has beenhampered by difficulties in arranging inter-ministerial cooperation. Time and efforts could have beenreduced and the process of harmonization could have been carried further if the cooperation had beenbetter.

* 'Per diem 'payments. The difficulties encountered in executing the legal component were caused to agreat extent by the insistence of the responsible legal department on the payment of customary per diembonuses and by the refusal of the consultant to effect such payments.

* Employment of civil servants. The positive impact of the abolishment of BGGA, STG and LNG wouldhave been augmented if it had been possible to release a portion of the personnel with faircompensation.

It is recognized that these factors are of systemic nature and go far beyond the scope of the project. Theyare difficult to change and require time for proper problem resolution in a broad framework.

5.3 Factors generally subject to implementing agency control:MMGE, partly by own decision and partly by pressure from other Government branches, negotiated miningrights with potential private investors in a discretionary and fairly non-transparent way. This was the casefor bauxite and alumina concessions, in particular those related to the Dian Dian deposits in the Boke area.These negotiations were outside the direct scope of the project and the Government considered them as anadditional vehicle to effect new mining investment. It is not known whether in the absence of such practicesa larger aluminium company or consortium would have stepped forward with a major investment (presentintemational market conditions are not favorable for it), but certainly the practice has not improved thecountry's reputation for mining investments.

Also, a tendency of MMGE to get involved in the design of new mining projects may alienate somepotential investors, who normally prefer total freedom in making their project design and investmentdecisions.

On the other hand, it is realized that the strong efforts of MMGE in promoting projects increased someinvestors' interest. It appears that the Govemment is still searching for a proper balance between its keeninterest in promoting mining investment and its new regulating and facilitating role, which requires a degreeof detachment and transparency hitherto unknown to the Govemrnment.

5.4 Costs andfinancing:There have been no problems related to the costs and financing of the project. Two factors have beencritical for this positive outcome:

* External contracting of services. The services connected with the preparation of the geological maps

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have been contracted out in large, comprehensive packages to experienced (prequalified) bidders. Analternative method, normally preferred by the client but carrying a much higher risk, would have beento engage the geological services of the state with external technical assistance.

* AFD supportfor counterpartfunds. Based on an agreement between the Government of Guinea andthe Govemment of France, a portion of the debt service for old Friguia loans has been allocated tocover the counterpart funds of this project.

6. Sustainability

6.1 Rationalefor sustainability rating:The sustainability of the project is rated Likely, because the Government made significant progress towardsan acceptable policy and an enabling institutional environment, and because the Govemment hasdemonstrated its commitment to follow-up on the results and recommendations of the project. The presentpolicy continues to encourage private ownership of mining operations and a regulatory/facilitating role ofthe state. It is unlikely that the achieved privatization of management of mining enterprises will be reversed;in contrary, full privatization has become more likely as a result of the project. Unsustainable miningservices by the govemrnment have been arrested. Again, it is unlikely that the achievement will be reversed,but it is likely that the remaining issues identified under the project will be appropriately addressed infuture. Furthermore, there is commitment to institutional and management changes that will permit adecentralization of mining and environmental services for facilitation of community driven development inmining areas. Linkages have been established with the Village Communities Support (PACV) and theCapacity Building for Service Delivery (PRCI) projects and the first steps of integrating mining into thesetwo operations have started. The strengthening of local environmental services is expected to have aparticularly positive impact on sustainability.

6.2 Transition arrangement to regular operations:While for the mining operations the transition has been made through introduction of private managementand adoption of policy changes, the budgetary transition is still missing for the mining administration.Arrangements are yet to be made for Borrower-intemal financing of the essential services for mining thatwould reduce the dependence on donor support. It is expected that progress towards achievement ofsatisfactory budgetary arrangements for the mining administration will be made under the PRCI.

7. Bank and Borrower Performance

Bank7. 1 Lending:The Bank's performance in preparing the project is rated Satisfactory. The identification of the project wasbased on the adoption of a new mining policy by the Govenmment. During project preparation andappraisal, adequate consideration was given to technical, economic, institutional, financial management andprocurement aspects, secured by an adequate quantity and quality of staff and consultants work input.Major lessons leamed from previous projects have been appropriately considered in the project design.Those lessons referred in particular to: (i) Government commitment (OFAB was abolished); (ii);counterpart funds (a special arrangement was made to cover these from sector-related debt public debtpayments to France); and (iii) the implementing agency's capacity (geological mapping was contracted out).

7.2 Supervision:The Bank's performance in supervising the project is rated Satisfactory. There has been a continuity ofBank staff involved. Contacts with the implementing agency have been facilitated through the GuineaCountry Office. Adequate attention was paid to the likely development impact and adequate consultationwas maintained with the implementing agency on issues relating to project execution. Flexibility has been

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demonstrated in approving needed modifications, such as for the Legal and Restructuring Components.Bank managers have been involved at critical points, such as for the abolishment of ANAIM, the extensionof the closing date by 6 months and the definition of follow-on operations.

7.3 Overall Bank performance:The overall Bank performance is rated Satisfactory.

Borrower7.4 Preparation:The Borrower's performance in preparing the project is rated Satisfactory. During preparation, theBorrower's commitment to sector reform was particularly appreciated. Such commitment was demonstratedin the abolishment of OFAB, a politically difficult decision for the Government, and in the adoption of anew mining code. While these have been powerful signals of Borrower engagement, active involvement ofthe Borrower in the detailed design of the project has been relatively modest and was mainly left to aconsultant and the Bank.

7.5 Government implementation performance:The Borrower's performance in implementing the project is rated Satisfactory, despite difficultinter-ministerial cooperation and lack of progress in civil service reform (see Section 4.2, Legal andInstitutional Components). The rating is based on the Government's continued commitment to sector reformduring project implementation, as demonstrated through the abolishment of ANAIM and the transfer ofmanagement of mining operations to private partners. The Government's commitment was alsodemonstrated in its willingness to privatize Aredor, Friguia, CBG and SBK. While in most cases only thetransfer of management but not of assets was achieved, the decision to engage an investment bank forprivatization was a Government initiative that went beyond the original scope of the project.

7.6 Implementing Agency:MMGE's performance in implementing the project is rated Satisfactory. MMGE's project coordination unithas been efficient in managing the project's execution. The unit has demonstrated good funancialmanagement and procurement capabilities. The unit also cooperated well with with donors (France), miningcompanies and, when required, with other agencies. All project audits have been satisfactory. Satisfactoryperiodic progress reports have been prepared by the coordination unit, though not all reports weresubmitted to the Bank regularly.

7.7 Overall Borrower perfornmance:The overall Borrower performance is rated Satisfactory.

8. Lessons Learned

Positive lessons. The following positive lessons have been learned from the implementation of the project:* Contract special services. The external contracting of the geological mapping work has been a

remarkable success. In countries with weak implementation capacity, similar special services shouldpreferably be always contracted as long as there is insufficient local capacity. This way, the service canbe delivered at high standards, including the transfer of latest international technology. The twinningarrangement with a geological survey from an important industrialized country (in this case it wasCanada) contributed to the success of the arrangement. When needed, the service could be repeated in afew years. This way, the recipient country can maintain a relatively modern system in a cost-efficientway.

* Have a small PCU directly reporting to Minister. The PCU consisted of a small team, basically thecoordinator, a technical adviser and the accountant. The small size of the unit and the unrestricted

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direct access of the coordinator to the Minister proved to be very efficient. The team members workedas civil servants, financed by the Government, and did not receive consultant fees. They efficientlyperformed coordinating and teaching/coaching tasks and were respected by other Ministry andGovernment staff.

* Motivate by training. The training programs executed under the project had a significant motivatingeffect, for the coordinating team as well as for eligible staff from the Ministry. Motivation was not onlyinduced by participation in foreign training but also by attending local courses. Eligibility for foreigntraining was determined by prescribed procedures and the selection of candidates had to be approvedby the Minister.

Negative lessons. The following negative lessons have been leamed from the implementation of the project:* Change in civil servants' status cannot be achieved at sector level. The project did not achieve a

reduction in the number of MMGE staff when redundant services (STG, BGGA and LNG) weredissolved or redefined. In Guinea, it appears not possible to achieve such adjustment in any sectoroperation. Instead, it appears that such measures would only be possible as part of a majorcross-sectoral operation, after a difficult and lengthy dialogue with the Government.

* Inter-ministerial cooperation can hardly be achieved without a specialframework set up in advance.The project had difficulties in achieving efficient inter-ministerial cooperation, as required forharmonization of laws under the Legal Component. While in the end the cooperation was achieved, it isassumed that the process would have been easier and faster had the other ministries and their key staffbeen involved from the very beginning.

9. Partner Comments

(a) Borrower/implementing agency:Detailed contributions from the Borrower can be found in Annex 8.

(b) Cofinanciers:No comments have been received from cofinanciers.

(c) Other partners (NGOs/private sector):Not applicable.

10. Additional Information

A detailed list of additional available documentation on the project can be found in Annex 7.

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:lIndicator/Matrix Projected In last PSR Actual/Latest Estimate

1. Number gold mines in operation 2 2

2. Number of diamond mines in operation 1 3

Output Indicators:

IndicatorlMatrix Projected In last PSR ,. ActuaULatest Estimate

1. Number of active exploration permits 42 45

2. Completion of Data Component 100% by end 1999 100% by end 1999

End of project

The outcome and output indicators shown above were listed in Schedule B of the MOP as key performnanceindicators. The SAR (dated May 10, 1996) did not contain the now standard Project Design Summary (LogFrame) and related key performance indicators.

Additional indicators not referred to in the legal documents and the PSR are shown below:

Indicator' Actual at Appraisal' Actual at Project Completion'Export Quantity

- Bauxite 13.6 million tons 13.9 million tons- Alumina 0.6 million tons 0.6 million tons- Gold none 11.4 tons- Diamonds 5.1 thousand carats 41.5 thousand carats

Export Value (in S million)- Bauxite 300.9 289.9- Alumina 96.3 102.8-Gold 108.1- Diamonds 0.4 0.3

tota 397.6 501 1 (+26%)thereof CBC 283.2 269 1 (-5%)

Taxes Receivedfrom Mining (in X million)- Bauxite 107 3 72.0- Alumina 1.3 1.4- Gold 0.5 6

- Diamonds 0.04 3.7tota 109.1 1.8

thereof CBG 107.3 79.0 (-28%)72.0 (-33%)

All indicators for industrial output only.

Year 1995 results.

Year 2000 results.

Due to investments and new management, production increased 20% in 2001.

-11 -

Despite increased output, export value decreased due to 10% price decline

Tax revenues from gold mining are expected to increase once accelerated depreciation for recent investments is exhausted and gold prices haverecovered (during the penod 1995-2000, gold pnces dropped by 27%, making it difficult even for well established producers to return a profit)

CBG's tax contnbutions declined due to decline of bauxite pnce and lower tax rate

- 12 -

Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)Appraisal Actual/Latest. Percentage ofEstimate Estimate Appraisal

Project Cost By Component US$ million US$ millionLegal Component 1.34 1.56 103Data Component 9.02 7.03 69Institutional Component 2.30 3.19 124Restructuring Component 1.42 2.13 132Training 0.41 0.93 197Project Preparation 0.50 0.28 56

Total Baseline Cost 14.99 15.12Physical Contingencies 1.01Price Contingencies 0.80

Total Project Costs 16.80 15.12Total Financing Required 16.80 15.12

consultant services for promotion, training and workshops

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

E.pendIture Cat-gory ICB Procurement Method" _,E-x' erindlture Categorfy ,ICB 2, .. NCB Oher. N.B.F. Total Cost

1. Works 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

3. Services 0.00 0.00 5.80 0.50 6.30Consultant Services (0.00) (0.00) (4.60) (0.00) (4.60)

4. Service Contracts 9.60 0.00 0.00 0.00 9.60(6.70) (0.00) (0.00) (0.00) (6.70)

5. Training 0.00 0.00 0.40 0.00 0.40(0.00) (0.00) (0.40) (0.00) (0.40)

6. PPF Refinancing 0.00 0.00 0.50 0.00 0.50(0.00) (0.00) (0.50) (0.00) (0.50)

Total 9.60 0.00 6.70 0.50 16.80(6.70) (0.00) (5.50) (0.00) (12.20)

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)L.- tProcurement Method' -- otl

Expendihtre'Categry -- ota l. Cot - CB NCB ~~~~~~~Othe'r

1. Works 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 0.00 0.00 0.00 0.00 0.00

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)Appraisal Actual/Latest. Percentage ofEstimate Estimate Appraisal

Project Cost By Component US$ million US$ millionLegal Component 1.34 1.56 103Data Component 9.02 7.03 69Institutional Component 2.30 3.19 124Restructuring Component 1.42 2.13 132Training 0.41 0.93 197Project Preparation 0.50 0.28 56

Total Baseline Cost 14.99 15.12Physical Contingencies 1.01Price Contingencies 0.80

Total Project Costs 16.80 15.12Total Financing Required 16.80 15.12

consultant services for promotion, training and workshops

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

E.pendIture Cat-gory ICB Procurement Method" _,E-x' erindlture Categorfy ,ICB 2, .. NCB Oher. N.B.F. Total Cost

1. Works 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

3. Services 0.00 0.00 5.80 0.50 6.30Consultant Services (0.00) (0.00) (4.60) (0.00) (4.60)

4. Service Contracts 9.60 0.00 0.00 0.00 9.60(6.70) (0.00) (0.00) (0.00) (6.70)

5. Training 0.00 0.00 0.40 0.00 0.40(0.00) (0.00) (0.40) (0.00) (0.40)

6. PPF Refinancing 0.00 0.00 0.50 0.00 0.50(0.00) (0.00) (0.50) (0.00) (0.50)

Total 9.60 0.00 6.70 0.50 16.80(6.70) (0.00) (5.50) (0.00) (12.20)

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)L.- tProcurement Method' -- otl

Expendihtre'Categry -- ota l. Cot - CB NCB ~~~~~~~Othe'r

1. Works 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 0.00 0.00 0.00 0.00 0.00

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Annex 3. Economic Costs and Benefits

The main assumptions that now differ from those made at appraisal (SAR Annex 5) are:

* a lower gold price, but a higher gold production;

* a delay in the expansion of alumina production, but a prospect for a larger expansion in future; and

* a more limited expansion of bauxite production, due to a structuraL change in the internationalaluminium industry that shifts new alumina production capacity to bauxite producing countries.

In particular, the following changes of assumptions are involved:

Assumption AtApporaisal Revised (December 2001)

gold price 12 M$/t 9 M$At

economic benefit from gold mining 27% of gold price 18% of gold price

gold production 2 t/a 6 tla

alumina expansion completed 2005 2009

alumina expansion capacity 0.5 MT/a 1.2 Mt/a

bauxite expansion capacity 5 Mt/a 2 Mt/a

Recalculating the net present value and the economic rate of return, the results are as follows:

At Appraisal Revised (December 2001)

NPV 91 Ms 91 M$

ERR 55% 57%

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Annex 3. Economic Costs and Benefits

The main assumptions that now differ from those made at appraisal (SAR Annex 5) are:

* a lower gold price, but a higher gold production;

* a delay in the expansion of alumina production, but a prospect for a larger expansion in future; and

* a more limited expansion of bauxite production, due to a structuraL change in the internationalaluminium industry that shifts new alumina production capacity to bauxite producing countries.

In particular, the following changes of assumptions are involved:

Assumption AtApporaisal Revised (December 2001)

gold price 12 M$/t 9 M$At

economic benefit from gold mining 27% of gold price 18% of gold price

gold production 2 t/a 6 tla

alumina expansion completed 2005 2009

alumina expansion capacity 0.5 MT/a 1.2 Mt/a

bauxite expansion capacity 5 Mt/a 2 Mt/a

Recalculating the net present value and the economic rate of return, the results are as follows:

At Appraisal Revised (December 2001)

NPV 91 Ms 91 M$

ERR 55% 57%

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingEl Macro policies 0 H OSUOM O N * NALi Sector Policies O H OSUOM O N O NAF Physical * H 0 SU C M 0 N O NAf Financial 0 H * SU O M O N O NAO Institutional Development * H 0 SU 0 M 0 N 0 NA

El Environmental 0 H OSUOM O N * NA

SocialLi Poverty Reduction O H O SU O M 0 N * NAL Gender 0 H O SU 0 M O N * NALi Other (Please specify) O H O SU O M 0 N * NA

F Private sector development 0 H 0 SU 0 M 0 N 0 NA2 Public sector management 0 H 0 SU 0 M 0 N 0 NAI Other (Please specify) O H O SU O M O0N * NAPhysical: because of Data Component.Financial: project costs slightly below appraisal estimate.Institutional Development: Government gave up role of operator and abolished non-essential services.Private Sector Development: private management installed.Public Sector Management: Government abolished non-essential services, but budgeting for future operation ofessential services and civil servant reform remain issues to be solved.

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

0 Lending OHS OS OU OHU0J Supervision O HS * S OU OHUC0 Overall OHS OS OU O HU

6.2 Borrower performance Rating

O Preparation O HS * S O U O HUO Government implementation performance 0 HS * S 0 U 0 HUOl Implementation agency performance O HS * S 0 U O HUF] Overall O HS * S OU O HU

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Annex 7. List of Supporting Documents

Staff Appraisal Report, Report No. 15291-GUI, May 10, 1996Memorandum of the President, Report No. P-6790-GUI, May 10, 1996Credit Agreement,Amendments to Loan AgreementBack-to-office reportsProject Status ReportsBorrower's Contribution (in French)

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Additional Annex 8. Borrower's Contribution

Objectifs du projet et mise en euvre

Les objectifs du projet etaient centres sur le renforcement de la capacite du Gouvemement en tantque facilitateur et regulateur des activites minieres, son retrait des activites productives en tantqu'operateur et actionnaire et ameliorer sa capacite pour l'attrait des investissements prives pourassurer le developpement du secteur au niveau du potentiel geologique et minier de la Guinee. Lesactions prevues comprenaient: (i) F'amelioration du cadre juridique du secteur minier; (ii) lafourniture de l'information geologique de base pour la promotion des investissements; (iii)I'amelioration de la capacites des institutions pour la promotion des investissements et I'applicationdes lois et de leurs reglementations; et (iv) I'assistance pour la restructuration des entreprisesminieres publiques. De plus la formation des cadres des institutions a constitue une composanteimportante pour l'accomplissement des objectifs du projet.

Pour atteindre les objectifs fixes, le projet a ete articule en cinq composantes

I) Une composante juridique, dont l'objectif principal a ete d'assister le Gouvernement guineen Aameliorer le cadre juridique et reglementaire relatif au secteur minier de maniere A soutenir laposition concurrentielle de la Guinee en ce qui conceme l'attrait des investissements miniers etpromouvoir l'efficacite et la transparence de l'administration du secteur.

2) Une composante des services avec pour objectif de fourmir aux investisseurs prives l'informationgeologique essentielle sur la Guinee comprenant des leves de geophysique aeroportee etgeologiques modemes et l'installation d'un systeme d'information geologique et miniere modeme quifacilitera l'acces A l'information pour la promotion des investissements, l'organisation etl'informatisation du centre de documentation et du cadastre minier.

3) Une composante institutionnelle pour aider le Gouvemement A amrliorer l'efficaciteinstitutionnelle des principaux services de I'administration miniere et A se desengager desg&o-services jug6s non essentiels.

4) Une composante restructuration pour aider le Gouvemement A preparer des plans detailles pourredefinir son r6le dans les entreprises minieres ou il detient encore des interets majeurs (SBK,CBG/ANAIM et Friguia) et pour accroitre la competitivite de ces entreprises A traversl'incorporation d'une gestion privee.

5) Une composante de formation pour ameliorer la capacite des ressources humaines del'administration miniere dans la realisation de leurs fonctions et actualiser leurs connaissances dudeveloppement m inier intermational A travers des semrinaires en Guinee et des voyages d'etude Al'etranger.

L'agence responsable de 1'execution du projet a ete le Ministere des Mines, de la Geologie et del'Environnement (MMGE) seconde dans cette tache par les services cles (Centre de Promotion et deDeveloppement Minier (CPDM), Direction Nationales de Mines (DNM), Direction Nationale de laRecherche Geologique et des Hydrocarbures (DNRGH) et les Entreprises Publiques et Mixtes,Compagnie Bauxites de Guinee (CBG), la societe Friguia et la Societe des Bauxites de Kindia

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(SBK).

Le Project de Promotion des Investissements dans le Secteur Minier (PISM) a ete execute a traversdes services de consultants et d'entrepreneurs foumissant les services d'assistance technique ainsique les equipements necessaires.

Les services de consultants ont couverts plusieurs aspects, comprenant:* La revision et l'harmonisation des lois et de la reglementation du secteur minier* Le renforcement des capacites institutionnelles et la reforme des services cles du MMGE* L'assistance technique pour la restructuration des entreprises mixtes et publiques du secteur* La formation des cadres dans le travail.

Les ouvrages realises dans le cadre du Project ont conceme:* Un leve regional de geophysique aeroport&e* Des leves geologiques au 200.000eme* L'etablissement d'un systeme d'information geologique et miniere.

Le programme de fomnation s'est articule a travers de:* Seminaires et ateliers en Guin&e* Seminaires et tables rondes en Guinee et a l'tranger* Voyages d'etudes a 1'6tranger et participation aux congres intemationaux.

Au sein des contrats de consultants et de services des equipements (vehicules, equipementsinformatiques et equipements de terrain) sont e foumis pour l'ex6cution des services et pourrenforcer la capacite des institutions dans la realisation de leurs fonctions.

Accomplissement des objectifs du Projet

Le MMGE a ete en mesure d'accomplir les objectifs essentiels du Projet et l'impact du Projet surles investissements prives dans le secteur est tres positif. Les resultats de chaque composante sontdetailles ci-dessous:

1) Composante Juridique

La coherence et de la compatibilite entre les differents codes a et examinee, les textes legislatifs etd'application visant i'harmonisation des differents codes ont ete 6eabores.

L'harmonisation de la reglementation du code minier avec celles des autres codes a ete obtenue parla signature des arretes conjoints suivants:

* Arrete conjoint visant a l'harmonisation des textes d'application du code minier et du code del'Urbanisme, relatif aux servitudes afferentes aux titres miniers et carrieres ainsi que les zonesinterdites ou protegees. Cet arrete a e signe entre le MMGE et le Ministere charge del'Urbanisme et de l'Habitat.

* Arrete conjoint pour l'harmonisation des textes d'application du code minier et du code del'Hydraulique, concemant la protection de l'environnement et l'usage des ressources en eaupar les exploitations minieres. Cet arret a et signe entre le MMGE et le Ministere charge del'Hydraulique et de l'Energie.

* Arret conjoint portant sur l'harmonisation des textes d'application du code minier et du code

- 21 -

forestier. Cet arrete a et signe entre le MMGE et le Ministere de l'Agriculture.* Arrete conjoint relatif A l'harmonisation des textes d'application du code minier et du code du

travail relatif A l'hygiene et la securite du travail dans les mines. Cet arrete a et signe entre leMMGE et le Ministere de I'Emploi et de la Fonction Publique.

* Arret conjoint relatif A la reglementation du transport, du stockage et de l'usage des explosifsdans le cadre des operations minieres. Cet arrete a ete signe entre le MMGE et le Ministerel'Administration du Territoire, de la Decentralisation et de la Securite.

Parmi les activites de la composante, un diagnostic environnemental des operations minieres a etecomplete avec des recommandations quant A la reglementation portant sur l'environnement et lasante et la securite dans les mines. Comme resultat de cette etude les procedures pour la realisationd'audits environnementaux et d'etudes d'impact ont ete definies ainsi que le plan d'administrationenvironnementale du secteur minier. Le MMGE est maintenant en possession des elements de basepour la formulation de la reglementation environnementale dans le secteur ainsi que pourl'administration de la protection de 1'environnement dans le secteur.

D'autre part, les activites de la composante ont permis aussi d'effectuer une etude sur l'volutionrecente et les perspectives du commerce mondial de la bauxite, de l'alumine et de l'aluminium.Cette etude a eu pour but de definir les repercussions de l1'volution recente du commerce mondialde la bauxite sur la competitivite des producteurs guineens de bauxite et d'alumine et a permis deproposer des formules pour l'etablissement des prix et les transferts de benefices ou de taxes. Lesconclusions de l'tude ont permis de positionner la Guinee dans le cadre des marches internationauxen reference A la qualite de la bauxite produite et de ses concurrents.

2) Composante des services

Les resultats de la composante des services, destinee A ameliorer l'infrastructure geologique de laGuinee et la connaissance de son potentiel minier, sont probablement les plus positifs du Projet.Non seulement les objectifs fixes ont e entierement atteints mais aussi le cofit final de lacomposante a ete 20% inferieur au budget prevu.

Un leve geophysique aeroporte combine en magnetometrie et en radiometrie A et effectue sur plusde 60.000 km2 du nord est de la Guinee en preparation du leve g6ologique. Tous les produits ontete livres sous forme digitale a la satisfaction du MMGE.

Le leve geologique de la meme surface a aussi ete complete dans sa totalite et les cartesgeologiques au 200.000eme ont et livrees en impression papier et en format digital. Le levefinance par les fonds IDA a ete compl6te par un leve geologique a la meme echelle finance par laCooperation Francaise (financement parallele) sur 45.000 km2 de la zone sud-est de la Guinee. Cesleves ont permis A la Guinee d'elever sensiblement la connaissance de son potentiel minier etforment de precieux instruments pour la promotion des investissements.

L'acces aux donnees geologiques et mini&res existantes a et facilite par l'etablissement d'unSysteme d'Information informatise Les donnees du cadastre minier et les informations geologiquesappropriees sous forme numerique ont ete transferees A un Systeme d'Information Geographique(SIG).

Les activites de la composante ont ete supervisees par un ingenieur conseil, en l'occurrence le

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Service Geologique du Canada permnettant de diminuer les aleas techniques de ces travauxhautement specialises. L'experience d'un ingenieur conseil pour la supervision des activites a etetres positive qui, combinee avec une tres bonne gestion du Projet a permis le succes de lacomposante.

3) Composante institutionnelle

La composante, dont l'objectif principal est d'aider le MRNE A ameliorer l'efficaciteinstitutionnelle des principaux services de I'administration miniere, a obtenu des resultats tressatisfaisants concernant la definition des procedures de travail et la formation des cadres.

Le cadre institutionnel des services cles du MMGE a et examine et les chevauchement defonctions et les conflits d'interet potentiels ont ete mis en evidence. Le MMGE a mis en ceuvre lesrecommandations des consultants pour ameliorer l'organisation et l'efficacite de ces services,principalement concemant 1'etablissement d'un cadastre minier independant des institutions pouvantcauser des conflits d'interet pour le registre des titres et la securite de la propriete miniere. Pour cefaire le MMGE a cree le Bureau du Cadastre Minier (BCM) sous la responsabilite directe duMinistre.

Les geo-services, apres de vaines recherches concemant la possibilite d'incorporer une participationprivee dans leur gestion, ont ete dissous permettant ainsi une rationalisation des ressourcesbudgetaires de I'administration.

La capacite de la Direction des Mines pour I'application de la reglementation en matiered'environnement, de securite et de sante a ete renforcee par la preparation de guides et manuelsd'inspection, la fourniture des equipements de terrain ainsi que de la formation pratique sur leterrain. Actuellement la DNM possede la capacite technique pour assurer le respect de lareglementation miniere.

L'etude institutionnelle du secteur a mis en evidence l'importance des services decentralises(deconcentres) de l'administration miniere pour le suivi des operations sur le terrain et enparticulier de l'artisanat minier. Les principales recommandations de l'etude sont dirigees sur lerenforcement des services deconcentres et l'integration de l'activit6 miniere dans le d6veloppementregional et communautaire. Ces recommandations ont et suivies d'un constat detaille des besoinsdes services deconcentres de l'administration miniere.

Les activites de Promotion des Investissements du Centre de Promotion et de DeveloppementMiniers (CPDM), cofinancees par le Credit IDA et la Cooperation Francaise, ont 6te renforceespar la definition et mise en ceuvre d'une strategie de promotion appuyee par du materielpromotionnel. Les cadres du CPDM ont ete inities a lenvironnement du marche des capitaux etevoluent maintenant avec plus d'agilite et un meilleur ciblage dans leur contacts avec lesinvestisseurs. Le CPDM a organise a la fin du Projet un symposium international A Conakry avecla presence des principaux operateurs prives ainsi que des investisseurs potentiels. Au cours de cesymposium, Ies resultats du Projet et principalement l'avance du developpement des connaissancesgeologiques du territoire national ont et presentes et l'information correspondante mise A la vente.

L'amelioration des capacites institutionnelles s'est refletee par une nette augmentation des permisminiers en vigueur et des investissements dans le secteur.

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Situation des titres miniers en vigueur

1995 1996 1997 1998 1999 2000 2001

Permis de recherche 37 53 77 121 153 161 183industrielles etsemi-industfielles

Permis d'exploitation 4 7 5 23 28 11 29industrielle

Permis d'exploitation 4 7 12 23 28 23 14semi-industrielle et dragage

Concession de recherche et 7 8 8 8 8 8 8d' exploitation

Total titres miniers 52 75 102 175 217 203 234

Societes et projets titulaires 46 61 87 102 102 108 115

Tous les permis d'exploitations sont en activite, tandis que l'activite des permis de recherche a etevariable selon les conditions climatiques et les conflits regionaux.

4) Composante restructuration

La composante de restructuration englobe les activites les plus delicates et difficiles du Projet amettre en ceuvre, compte tenu des implications sociales et politiques des actions necessaires. Lesdifficultes et contretemps n'ont pas manque, cependant le Project a accompli les principauxobjectifs traces, dont les resultats les plus saillants sont:

* La reactivation des operation de la mine de diamant d'Aredor au travers des investissements etde la gestion privee (la Societe Aredor First City) est intervenue tres t6t dans l'execution duProjet (1996). Depuis, la mine d'Aredor a et en production sans interruption. L'inventairephysique et financier des equipements d'Aredor finance par le Projet en 1996 a facilite letransfert de l'operation.

* L'usine d'alumine de la societe Friguia a ete remise en contrat de location gerance a AluminiumCompany of Guinea (ACG), un consortium comptant parmi ses membres Reynolds des EtatsUnis qui a ete recemment repris par Alcoa. Bien que Reynolds/Alcoa est partenaire minoritairedu consortium ACG, sa responsabilite technique et de gestion de l'operation garantit la reussitedu transfert. L'accord de location gerance signe le 30 Novembre 1999 a 6te ratifie al'unanimite le 20 Decembre 1999 par l'Assemblee Nationale. Depuis Juillet 2000, lesinstallations de Friguia sont operees par le consortium ACG.

* SBK. En vue de realiser la rehabilitation, l'extension et l'exploitation des gisements de bauxitedans la zone de Kindia sur le site de la SBK et en assurer un accroissement des capacites deproduction, I'Etat Guineen, proprietaire de la Societe a decide de conceder a la Societe RouskiAlumini de Russie une convention de location gerance des installations de la Societe. Ainsi en

- 24 -

I'an 2000, la SBK a entame les negociations avec Rouski Alumini et A partir du mois de Mai2001, la SBK a ete transferee A la Societe Rouski Alumini, suite A la signature d'uneConvention entre ce Pays et la Republique de Guinee. La nouvelle Soci&e d'Exploitation desBauxites de Kindia a pris le nom de Compagnie des Bauxites de Kindia - (CBK). La premierephase des activites prevues par la Convention consistera A la realisation par le locataire gerant,A ses frais de la renovation et de la rehabilitation de la production miniere sur le gisement deDebele et I'augmentation du volume de production de bauxite de 2 500 000 T/an. La deuxiemeetape consistera en la realisation des travaux de construction miniere visant A mettre enexploitation le gisement de Balandougou. La troisieme phase consistera en la realisation etl'appreciation des possibilites d'exploitation d'autres gisements du groupe de Kindia afin deporter la production A 3 000 000 T/an.

* L'Office de I'Amenagement de Boke (OFAB) a e dissout et remplace par l'ANAIM avant ledebut du Projet. L'administration et l'usage des infrastructures minieres de l'Etat a fait l'objetde negociations entre l'ANAIM et CBG. Ces negociations ont et conclues par la signatured'une convention le 16 Juin 1996. Le Projet a finance les services d'assistancejuridique pourassister le Gouvemement dans ces negociations. En 2000 la direction generale de l'ANAIM aete dissoute le 31 decembre 2000.

Les efforts de restructuration des entreprises minieres publiques a marque le franc succes su Projetet a consacre 1'engagement de la Guinee sur une economie de marche et une politique de promotiondes investissements prives pour le developpement du secteur.

5) Formation

La formation des ressources humaines a constitue une composante importante du Projet et est unvolet essentiel pour faciliter la remise A niveau des cadres du MMGE en fonction de la nouvellepolitique miniere du Gouvernement.

Le volet formation a consiste en formation locale en Guinee et la formation A l'etranger. Laformation en Guinee s'est articulee en cours de formation de base (informatique, anglais,economie), stages dans des entreprises minieres, ateliers et cours avec instructeurs intemationauxet seminaires institutionnels ou nationaux. La formation A l'etranger a consiste principalement enstages dans des institutions homologues, cours de formation de courte duree, voyages d'etude etparticipation aux congres et rencontres intemationales de geologie et des mines. Le programme deformation du Projet a ete co-finance par les fonds IDA et le FAC (Cooperation franqaise).

Les activites de formation ont demarre en 1997 avec la mise en vigueur du projet, bien que desseminaires aient dejA ete realises en 1996 avec financement du PPF. Comnme resultat de ceprogramme les cours et des seminaires de formation en Guinee ont requ 1589 participants et 165formations A l'etranger ont ete organisee.

Formation: Nombre des participants

1996 1997 1998 1999 2000 2001 Total

Formation en Guinke 56 254 435 304 478 62 1589

Seminaires collectifs 56 150 315 202 400 1123

- 25 -

Formation de base 104 120 102 78 62 466

Formation Etranger 27 48 40 31 19 165

Individuelle 27 48 40 15 5 135

Voyages d'etudes 16 14 30

Total 56 281 483 344 509 81 1754

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IMAGING

Report No.: 24401Type: lCR